A booby trap for Abbott in handouts

The Labor government will put Opposition Leader
Tony Abbott
on notice over extra cash benefits delivered through the once-in-a-lifetime mining boom, linking family payments to the tax on profits at big miners.

The government has abandoned a 1 per cent company tax reduction because it would not win parliamentary support, instead giving $600 million to people who receive Family Tax Benefit A.

Some 1.1 million families benefit from the mining-funded cash splash to deal with rising costs of living, particularly power and petrol.

The diamond-in-a-rough budget will give the government political leverage over Mr Abbott, who has said he will not support any measures derived from a 22.5 per cent tax on coal and iron ore profits, which is forecast to raise $9.7 billion in its first three years. Soft commodity prices and a high dollar have wiped $900 million off the Mid-Year Economic and Fiscal Outlook forecast for the November Fiscal Outlook forecast.

The Greens and crossbenchers
Tony Windsor
and
Rob Oakeshott
are set to support the measure, as both have campaigned for a fairer delivery of mining profits to the real economy.

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The move will also boost consumption, which makes up two-thirds of the $1.3 trillion economy and should spur spending at such retailers as Harvey Norman.

A related education bonus to families, worth $2 billion in the next five years, was also held up in Parliament yesterday, the opposition blocking the government from introducing the measure. It also aims to boost consumption and help families as the carbon tax begins in July.

The SchoolKids Bonus will replace the existing program that requires families to collect receipts for textbooks, computers and school expenses to claim a government benefit.

Mr Oakeshott said he would support the move, but Mr Windsor, Tasmanian independent
Andrew Wilkie
and the Greens have not said whether they will support the plan before they see the legislation.

The government will face a parliamentary fight on foreign aid benefits as it tries to more than halve the growth in offshore development assistance.

Labor plans to spend $5.153 billion on official development assistance in 2012-13, of which $4.752 billion will be managed by AusAid. This halves annual growth to 4 per cent from 9.8 per cent growth in 2011-12.

The Greens and Mr Wilkie have vehemently opposed cuts to the foreign aid budget and may hamper its passage through Parliament.

The government plans to cut about 3000 jobs from the public sector plus more unexpected cuts this year. This will raise the ire of the Greens and the crossbench, including Queensland MP
Bob Katter
, but seems likely to gain Coalition support.

The Greens are specifically concerned about the plan to cut more then 300 positions from the Department of Climate Change.

Changes to the superannuation tax regulations also face a rocky road through Parliament, where the government relies on the support of two independents, ousted Labor MP
Craig Thomson
and Greens MP
Adam Bandt
to get legislation through the House of Representatives.

Only two of the four have voiced support for the government’s plan to defer the higher concessional contributions cap.

That plan, which will save $1.459 billion over the next five years, may have the support of Mr Oakeshott, but the Greens want to amend it in line with its superannuation plan and the remaining crossbench is not committing to the detail until it can examine the legislation.

The government also looks set to struggle with its plan to change the sole parents’ pension. It reduces the age at which it applies to eight instead of the current 16 and forces parents to provide stronger evidence that they are either training or looking for work.